Looking at his techie father buy Bitcoin (BTC) and Ethereum (ETH), Harsh Vakharia did some research and found it was risky to hold cryptocurrency on exchanges, as the exchanges were prone to hackers stealing from them.
The software engineer identified it was also unsafe to store the tokens in an electronic wallet – stored on a computer or mobile device, as they were also prone to hacking and viruses.
This finding inspired Harsh to launch online gadget store Etherbit, a startup that retails hardware wallets, which are considered safer and more secure than electronic wallets and holding cryptocurrency on an exchange.
“In 2017, I took a small loan from my father and started Etherbit in Surat. As hardware wallets were not manufactured or available easily in India, I wrote to leading French hardware wallet maker Ledger, which agreed to partner with us and retail their wallets in India,” Harsh says.
Hardware wallets store the user’s private key, which is a critical piece of information used to sign off on and authorise cryptocurrency transactions.
Crypto wallets on Etherbit’s online store
After importing a small batch of hardware wallets from Ledger, Etherbit began retailing them to Indian customers.
If not for such a store, customers would have to import the wallets, and this involved KYC and customs processes.
“I saw crypto investors prefer privacy and would not like to divulge their personal information during the KYC process for imports. So it made sense to offer them imported hardware wallets directly in India from an online store,” Hash says.
Besides Ledger, the startup partnered with Czech Republic-based Trezor, another leading hardware wallet brand, to import its products and sell to Indian crypto investors.
On its website, hardware wallets begin at a few thousand rupees, but the ones by Ledger and Trezor start at Rs 5,000.
Although Harsh refused to disclose Etherbit’s sales, he says there is traction from major cities as well as Tier II and Tier III towns in India.
He also claims some major names from India’s blockchain and crypto industry have purchased from the store.
“We are privacy-focused and delete all the labels and names in a short span of time. I myself don’t know the names of many of our top customers,” Harsh says, adding:
“Now we have over 13 global vendors who are all excited about the Indian crypto market, and believe it can see exponential growth if things go well.”
Harsh’s sister, Dhvani, was involved from the start and became more involved in the business from 2019 onwards.
“As the team lead for Etherbit’s workforce of 13, I oversee imports, clearances, and the day- to-day functioning of the startup, while pursuing an MSc simultaneously,” she says. Harsh, who oversees product innovation at Etherbit, works as a full-stack engineer at ConsenSys.
Retail model and manufacturing
The brother-sister duo explain Etherbit’s business model is that of a traditional retailer, but intends to partner with distributors and resellers as demand increases.
“We import in bulk directly from manufacturers and the products reach us from France, Czech Republic, and other European countries. Then we sell the hardware wallets to customers, and we take care of the shipping as well,” says Harsh.
Etherbit has also started manufacturing merchandise (cryptocurrency-themed t-shirts, hoodies and mugs) as well as wallet accessories such as backup plates (which can be used to engrave one’s wallet password for safekeeping).
“The primary hardware wallet, although safer than its alternatives, are prone to weather damage and electromagnetic interference, or can be lost. Thus, people keep a backup password on a piece of paper, but this too can be easily lost or destroyed. Hence, the backup plates, made from stainless steel, are a solution for engraving and storing the password,” Harsh explains.
The founders believe hardware wallets are a good habit or best practice for investors to adopt at an early stage of their crypto journeys. They maintain that investors with a small portfolio can still purchase a hardware wallet for storing and protecting their holdings.
“We don’t see many investors exiting crypto. Rather, people stack more crypto as time progresses. So, we feel it’s good for them to start using hardware wallets early on,” Harsh says.
When Etherbit started, the founders identified a few competing stores (the names of which they did not disclose), but saw them all disappear post the bearish markets of 2018 and 2019.
Harsh and Dhvani believe Etherbit survived as it is playing a long-term game, and is not looking at huge, short-term gains.
“For us, it has always been about keeping hardware wallets affordable and accessible in the long run. But for short-term players, it is not easy to keep running when they see negative returns during challenging times,” Harsh says.
Backup plate by Etherbit on its online store
Optimism amidst uncertainty
Going forward, the brother-sister duo are excited about the Atmanirbhar Bharat and Make-in-India opportunities for manufacturing hardware wallets locally.
They admit this could take a long time, but remain optimistic that local production can boost R&D and job creation in the blockchain and cryptocurrency industry in India.
“We started with imports, but eventually, the market will look to see if local production can happen. Etherbit did not require external capital investment earlier, but we look forward to working with investors as manufacturing in India picks up and a range of new products and technologies enter the ecosystem,” he says.
Etherbit is playing in a Indian market ranked second globally in terms of crypto adoption in 2021, according to a report by blockchain data platform Chainalysis.
However, crypto traders await the nation’s bill on cryptocurrency regulation, where it has been allegedly recommended that all private cryptocurrencies, except any virtual currencies issued by the state, will be prohibited in India.
“More education is needed to understand crypto tokens better and not confuse it with something else. Although the crypto can be utility tokens, securities, etc., regulators are mostly concerned about the trading aspect. The underlying distributed ledger technology has many more use cases as well,” Harsh says.
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